Today we're going to take a closer look at large-cap Consumer Staples company Keurig Dr Pepper, whose shares are currently trading at $31.46. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Keurig Dr Pepper Inc. operates as a beverage company in the United States and internationally. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 24.36 and an average price to book (P/B) ratio of 4.29. In contrast, Keurig Dr Pepper has a trailing 12 month P/E ratio of 33.8 and a P/B ratio of 1.76.
Keurig Dr Pepper's PEG ratio is 2.85, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:
2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
---|---|---|---|---|
Revenue (MM) | $11,120 | $11,618 | $12,683 | $14,057 |
Gross Margins | 57.0% | 55.8% | 55.0% | 52.1% |
Operating Margins | 21.4% | 21.9% | 22.8% | 19.8% |
Net Margins | 11.28% | 11.4% | 16.92% | 10.22% |
Net Income (MM) | $1,254 | $1,325 | $2,146 | $1,436 |
Net Interest Expense (MM) | -654 | -604 | -500 | -693 |
Net Interest Expense (MM) | -$654 | -$604 | -$500 | -$693 |
Depreciation & Amort. (MM) | -$698 | -$653 | -$708 | -$709 |
Earnings Per Share | $0.88 | $0.93 | $1.5 | $0.93 |
EPS Growth | n/a | 5.68% | 61.29% | -38.0% |
Diluted Shares (MM) | 1,419 | 1,422 | 1,428 | 1,404 |
Free Cash Flow (MM) | $2,109 | $1,939 | $2,419 | $2,458 |
Capital Expenditures (MM) | -$365 | -$517 | -$455 | -$379 |
Net Current Assets (MM) | -$23,988 | -$23,561 | -$22,569 | -$22,908 |
Current Ratio | 0.35 | 0.31 | 0.47 | 0.47 |
Long Term Debt (MM) | $12,827 | $11,143 | $11,578 | $11,072 |
Net Debt / EBITDA | 4.71 | 4.4 | 2.82 | 3.66 |
Keurig Dr Pepper has growing revenues and a flat capital expenditure trend and a steady stream of strong cash flows. Additionally, the company's financial statements display average operating margins with a stable trend and positive EPS growth. However, the firm suffers from slimmer gross margins than its peers and a highly leveraged balance sheet.